Damages Quantification - Our Cases

Breach of contract cases often raise a myriad of business and quantification issues and damages amounts typically range in the many millions of dollars. We do a great deal of this type of work. So whether the dispute involves unlawful contract termination, failure to supply, failure to perform or other allegations, chances are good we've seen it before.

Case Examples

Plaza Stopped

This real estate case involved a multi-million dollar breach of contract lawsuit over a planned shopping plaza that did not proceed. We were asked to quantify damages, which required us to assess not just the profitability of a hypothetical project but also the developer’s ability to complete it given changing market conditions. We prepared an expert damages report and testified at trial. The majority of our loss quantification findings were adopted by the court and upheld on appeal.

Energy Contract Dropped

We were retained to estimate the profits lost from the decision to cancel a contract to buy the production of an expanded ethanol plant. The analysis was complicated by federal and provincial government subsidies: some in place, some expiring, and some scheduled to come into force during the loss period. We also had to factor in the capital costs of the expansion. We provided loss calculations, prepared a report and provided expert testimony. The arbitration panel agreed significantly with our calculations.

Garment Deal Repudiated

When a joint venture agreement to form a textile operation in the Middle East was repudiated, we were brought in to forecast both the expected cash flows had the agreement been fulfilled and the damages resulting from its cancellation. We quantified the losses and provided expert testimony before an arbitration proceeding. The arbitrator found in favour of our client and awarded damages based on our report.

Healthcare Venture Cancelled

CHS was engaged to assist in this case, which involved the cancellation of a new healthcare venture. Several of the key terms of the contract were in dispute, making the issue of quantifying damages especially challenging. The length of the contract was not explicitly stated nor was the number, or locations, of new business rollouts. We provided an expert report setting out several scenarios to reflect differing interpretations of the contract wording. The parties settled at mediation at a figure close to our scenarios.

These types of cases can cover a lot of ground but almost always involve complex quantification and disgorgement assessments, which are no simple matter. To assess the position a company would have been in were it not for the unlawful conduct of another party requires a disciplined assessment of the business realities of the opportunity, the parties and the industry. It boils down to credibility.

Case Examples

Competing Business

When a former employee of an industrial products supplier started a competing business, we were called in by the company to quantify the losses associated with a breach of fiduciary duty claim. We assessed the damages and testified in court. The judge found the former employee had breached his duty towards his former company, which was awarded damages based on our report.

Negligence Claim

This case involved a claim for losses resulting from alleged negligence by a lawyer in drafting the exit clauses in a real estate agreement of purchase and sale. We were retained by defendants to assess the opposing expert’s estimates and prepare a series of alternative calculations that could be used for mediation or settlement. The opposing expert had proposed many scenarios. We helped get that whittled down to a single mutually-agreed upon scenario that reduced the damages quantum and led to the resolution of the matter on the eve of trial.

Sales Reviewed

A water-treatment companyalleged that a key member of its management team who left to establish a competing business was in breach of fiduciary duty. We were retained to quantify the losses, which entailed conducting a review of historical sales, customer by customer, and comparing the results with those of the competing business. The company had several divisions and each required an individual assessment. Our report provided a framework for settlement discussions and the matter was ultimately resolved.

Class actions, by their nature, involve large numbers of people, and class members can have a wide range of particular circumstances. That makes assessing individual damages from the aggregate a challenging exercise, a bit like untangling a knot. We've performed detailed assessments of individual versus aggregate damages in numerous cases, both at the pre-certification stage and at trials.

Case Examples

Credit Card Fees

This class action lawsuit involved allegations a financial institution was charging its credit card holders undisclosed foreign exchange fees on foreign currency transactions. We were hired to prepare an expert report quantifying total transactions and related fees over a 13-year period. Complete data was not available for all years and all credit card types, so we were required to develop an estimation methodology that would stand up to close scrutiny. We prepared a report and provided expert testimony. Our quantification methodology was accepted by the court and helped form the basis of the judgment.

Disputed Tax Donations

CHS was retained by counsel to provide an expert opinion on the considerations required to assess damages on an individual versus an aggregate basis in this class action which arose from a disputed tax shelter program. We performed various analyses, swore an affidavit and were cross-examined on our conclusions -- which were cited in the certification decision. The matter was resolved in a court-approved settlement.

Failed Labour Fund

When a labour-sponsored investment fund collapsed on allegations of mismanagement, we were retained to provide an opinion on the considerations appropriate to the awarding of individual damages. There were questions over the timing of valuations of the fund’s investments and the possibility of delayed write-downs, which made determining the underlying value of the fund at various times a complex issue. We performed an analysis and provided an expert report. The matter was resolved with concurrent certification and a court-approved settlement.

Quantifying damages for alleged violations of the Competition Act requires a highly detailed analysis of the company’s business and sales practices in addition to the market definition and efficiencies assessments provided by economists. For alleged violation of the North American Free Trade Agreement, damages quantifications require a thorough assessment of both the business and the international markets in the industry claiming to be adversely affected.

Case Examples

Advertising Questioned

CHS professionals were retained to help a major Canadian retailer respond to Competition Bureau allegations its advertising was misleading consumers about the regular and sale prices on several products. We conducted a detailed assessment of the number of units sold at regular prices versus sale prices, and the proportion of time each item was on sale as determined in an analysis of store flyers, in-store advertising and interviews with the retailer’s own advertising planners. After our report was issued, the matter was settled out of court.

NAFTA Challenge

When a US lumber company filed a NAFTA complaint alleging Canada had violated its obligations under the U.S.-Canada Softwood Lumber Agreement, the federal government asked us to perform a lost profits analysis. The company argued that quotas set out under the agreement violated the minimum standard of treatment guarantees provided for foreign investors under NAFTA. We performed an analysis of the company’s own accounting documents and were able to provide a methodology that demonstrated an error in the claim being asserted. Based on our analysis, the NAFTA tribunal rejected the US company’s application.

Quantifying business losses that result from an expropriation is challenging because it requires looking into the future to assess what otherwise could have been. We know from experience it takes a highly reasoned analysis grounded in the dynamics of the affected business. We have the expertise. That’s why we are frequently called on by both claimants and expropriating authorities to quantify disturbance damages, business losses and out-of-pocket costs suffered from this type of disruption.

Case Examples

Renovation Delayed

The owners of a combined gas station and convenience store had to reconfigure their property after a piece of their land was expropriated to build a new road. Both the expropriation and road construction were expected to have a negative impact on their existing business – but it also meant the owners had to delay plans to renovate their store, which had been expected to increase revenues. We were retained to quantify those business losses and significant out-of-pocket costs. Our expert report was used as the foundation for a mediation, and the matter settled.

Construction Jams

When major construction started right next to their business, the owners of a recreational vehicle dealership were forced to deal with the noise, dust and large machinery as well as the permanent closure of one of their access points. The Ontario Ministry of Transportation retained us to quantify business losses and out-of-pocket costs. The loss report was jointly adopted by both sides and was a reference point in negotiating a successful settlement.

Farm Moved

We were retained by the owners of a corn and soybean farm who were forced to relocate when their land was expropriated to extend Highway 407, one of the largest highway construction projects ever in Ontario. Our report quantifying the business losses and out-of-pocket costs caused by the relocation formed the basis for settlement discussions. The matter settled in mediation.

Car Dealership

This expropriation involved a used-automobile dealership that had to relocate because of the planned extension of the Spadina subway in Toronto. The owners called on us to quantify business losses, past and future, and assess out-of-pocket costs incurred in the forced relocation. This case is among those related to the six-stop subway expansion waiting to be heard by the Ontario Municipal Board.

We have been involved in many large infringement cases that require quantification of either the plaintiff’s damages or the defendant’s accounting of profits under the Patent Act, the Trademark Act or the Copyright Act. We have also performed several highly specialized assessments under the Patented Medicines (Notice of Compliance) Regulations, known as “Section 8” cases. Infringement and Section 8 cases are invariably complex and often involve developing a variety of scenarios comparing the “but-for” world with the “actual” world to determine the losses suffered.

Case Examples

Household Product

This patent dispute involved two multinational consumer-products giants and a popular household product. With infringement claims of over $100 million, it was one of the largest intellectual property cases ever in Canada. CHS professionals were asked to assess and quantify the sales, costs and profits of several relevant products over a 17-year period. The parties also asked us to prepare an expert report reflecting the parties’ agreed-upon numbers for the hearing reference. The matter settled out of court soon after the hearing reference.

Engine Oil Additive

CHS professionals were retained to help a major multinational oil company put a figure on damages in this patent infringement case involving an additive used in engine oil. Our assessment required a detailed analysis of the other side’s accounting system and the development of various approaches to determine the proportion of its profit attributable to the infringing component. We quantified damages and our analysis was used in settling the dispute.

Post-acquisition disputes occur regularly. They generally involve a purchaser crying foul over the recently consummated sale of a company, business or division. The grievances typically involve allegations of inaccuracies or misrepresentations in financial statement disclosures, working capital amounts, future cost sharing and other purchase price adjustments.

Case Examples

Retailer Sold

This post-acquisition dispute stemmed from allegations of misrepresentations in a share purchase agreement and the financial statement disclosures of a major Canadian retailer. As consulting experts, we assessed the purchaser’s pricing and valuation deliberations, its due diligence and the application of Generally Accepted Accounting Principles. The detailed quantification analyses was used as the foundation for calculating the level of damages. Judgment was in favour of our client.

Government Contract

CHS was called in when a disagreement over the government contracting of office and printing equipment resulted in accusations of misrepresentations, breach of non-competition terms and bad faith. Working with industry professionals we determined sales and volume trends, and changes in technology, and also analyzed the company’s records for product mix and profitability -- which required consideration of 40 separate installations throughout Canada. We provided several expert reports quantifying the profits lost from various alleged breaches of the agreement of purchase and sale. The matter subsequently settled at mediation on the eve of arbitration proceedings.

Securitization Sale

The value of a securitization company was at the heart of this financial services dispute, with disagreement over the earn-out calculations new management owed the former owners following the company’s sale. We prepared an expert report and provided testimony at arbitration proceedings. The arbitration award adopted the majority of our loss quantification findings.

Price Adjustment

The acquisition of an armoured car business led to a post-acquisition dispute over financial issues such as the accounting for long-term contracts, accruals and payables. We were called in to investigate and provide an expert opinion. Our recommended corrections were accepted by both parties and resulted in a purchase price adjustment.